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Nvidia (NASDAQ:NVDA) took the financial world by storm in 2023, impressing investors with remarkable gains and solid financial reports. The company emerged as a leader in the artificial intelligence (AI) industry, making it a formidable force with plenty of room for growth.
The successes of NVDA not only drew attention to other semiconductor stocks but also emphasized the potential that lies within the AI industry. Any semblance of a tailwind in this space has the power to propel stock values to extraordinary heights.
Broadcom (AVGO)
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Broadcom (NASDAQ:AVGO) stands out as a top dividend growth stock that is well on its way to a $1 trillion market cap. With a consistent 10% or higher annual dividend growth and a 1.65% dividend yield, AVGO shares are trading at a 39 P/E ratio post a substantial 116% surge over the past year. Notably, the stock has soared by 355% in the last five years.
The company maintains healthy profit margins, evident from its impressive 37.2% net profit margin in the most recent quarter. Moreover, it recorded a 5% year-over-year (YOY) increase in revenue and a 7.4% YOY jump in net income.
In a bid to boost its stock price, AVGO initiated several share buyback programs, culminating in the purchase of 2.9 million shares during the third quarter, amounting to a total outlay of $2.17 billion.
Furthermore, Broadcom has solidified its position as one of the leading dividend growth stocks, underpinned by appreciation, a high dividend growth rate, and a respectable yield even after witnessing substantial gains. Recently surpassing a $600 billion market cap, the company is hurtling towards the coveted $1 trillion milestone at an impressive pace.
Advanced Micro Devices (AMD)
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Advanced Micro Devices (NASDAQ:AMD) is another semiconductor stock that has captured the attention of investors. With a 107% surge in its shares over the past year and a staggering 628% increase over the last five years, the company has solidified its position as a dominant force in the industry.
The semiconductor giant has made significant strides in expanding its market share in server, desktop, and mobile domains, fortifying its position as a key player in the AI arena. Moreover, its lineup of AI products presents compelling long-term growth prospects.
Exiting a bearish cycle, Advanced Micro Devices reported a notable 10% YOY revenue growth in Q4 2023. This substantial improvement was a stark departure from the 4% YOY revenue decline during the entirety of 2023 as compared to 2022. Additionally, the company has a tempting 0.70 PEG ratio, enhancing the appeal of its stock. Therefore, a surge in demand for the company’s AI chips could bolster its valuation substantially.
Taiwan Semiconductor Manufacturing (TSM)
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Unlike several of its counterparts, Taiwan Semiconductor Manufacturing (NYSE:TSM) largely missed out on the AI rally, resulting in a modest 39% uptick in shares over the past year, driven by a robust surge commencing in November.
Given its failure to capitalize on the rally, the company’s stock trades at a modest 26 P/E ratio while offering a 1.50% dividend yield. Comparable to AMD, TSM weathered economic headwinds and reported flat revenue growth in Q4 2023.
However, the company’s forward-looking guidance paints a different picture, hinting at an impending return to growth. Revenue is anticipated to range from $18.0 billion to $18.8 billion in the first quarter, with the midpoint representing an impressive 10% YOY growth rate from the $16.72 billion in Q1 2023 revenue. In addition, the leadership anticipates gross margins to fall within the 52% to 54% range.
Despite Taiwan Semiconductor Manufacturing’s relatively subdued performance over the past year, a broader outlook illustrates the company’s full potential. Over the past five years, TSM has delivered a commendable 250% gain for investors.
On this date of publication, Marc Guberti held a long position in AVGO. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Marc Guberti is a finance freelance writer at InvestorPlace.com who hosts the Breakthrough Success Podcast. He has contributed to several publications, including the U.S. News & World Report, Benzinga, and Joy Wallet.
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The post The Next Nvidia? 3 Semiconductor Stocks That Investors Shouldn’t Ignore appeared first on InvestorPlace.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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